Tax on overtime, bonuses and side income

Extra money is great — but extra income is taxed too, and a few myths cause needless confusion here.

First, overtime. A stubborn myth says overtime is "taxed more." It isn't taxed at a special higher rate — it's taxed like any other income. What can happen is that the extra earnings push part of your total income into a higher band, so that portion is taxed at your higher marginal rate. It can also make a single payslip look more heavily taxed than usual, because tax is often worked out assuming that pay level continues all year. It usually evens out.

Bonuses work the same way: they're normal taxable income, and National Insurance applies too, so a bonus can look smaller after deductions than the headline figure. That's not a special "bonus tax" — it's the ordinary rates applied to a lump sum.

Side income — freelance work, selling online, a second job — is where people most often slip up. A second job's tax can look odd because your tax-free allowance is usually applied to your main job, so the second may be taxed from the first pound. And genuinely self-employed side earnings are untaxed at source, meaning you'll owe tax on them through self-assessment. The rule of thumb: set aside a portion of side income as you earn it.

Why this matters for you. Every one of these — overtime, a bonus, a side gig — changes your real take-home in a way the headline number hides. That's precisely what mySal is built to show you instantly.